The weak hands are folding, just as the first wave of weak handed homeowners have done. Most of the "developers" (speculators) listed here are from out of town - Sacramento appears several times - soon this contagion will spread to the "stronger" hands. 2008 will make 2007 look like a game of musical chairs, without the chairs - if you are standing right now, when the music stops on your developments finances, there will be no one to take your place. These foolish speculators were paying $100k to $200k for raw land that only 6 years ago was selling for $10k-$20k per acre - what were they thinking?
From the Bakersfield Californian:
BY GRETCHEN WENNER AND VANESSA GREGORY,
Homeowners aren’t the only ones defaulting on property loans these days.
While not unprecedented in California, the sudden crop of developer defaults are apparently a first for the metro area.
“Never in Bakersfield,” said Bakersfield appraiser Gary Crabtree of Affiliated Appraisers.
In the early 1990s, Crabtree said, the Palmdale-Lancaster real estate market cratered because of layoffs in the aerospace industry.
Tom Cook, general manager of Bakersfield paving and grading firm Burtch Construction, said Burtch is owed money by Dunmore Diamond Ridge LLC for work at a southwest Bakersfield project touched by a complicated November bankruptcy filing.
“We haven’t been paid anything at all,” Cook said Thursday about a $900,000 bill submitted in mid-May.
Defaults:
• Paladino Hills LLC
Loan amount: $10 million
Location: 80 acres near the northwest intersection of Highway 178 and Alfred Harrell Highway• Dunmore Westport LLC
Loan amount: $20 million
Location: 79 acres at the southwest intersection of Morning and Paladino drives• GSJ Co. LLC
Loan amount: $5.5 million
Location: 147 acres at the northwest intersection of Paladino and Morning drives.• Reynen & Bardis (Cal Kern) LP
Loan amount: $6.8 million
Location: 58 acres near Morning Drive between 178 and Paladino Drive• Canyons LLC
Loan amount: $3.3 million
Location: Nearly 847 acres south of Hart Park and Alfred Harrell Highway.• Other
Loan amount: $5.1 million
Location: 33 acres on the north side of Paladino Drive east of Morning Drive.• Dunmore Diamond Ridge LLC
Loan amount: $30.6 million construction loan
Location: 77 acres on the south side of McCutchen Road between Ashe and Stine roads.• BVGG LLC
Loan amount: $4 million
Location: About 72 total acres on several parcels near Cottonwood Road around Casa Loma Drive and Watts Drive, including former golf course land switched to residential use.• Cottonwood Villas LLC
Loan amount: $2 million
Location: 40 acres north of Cottonwood Road between Planz and Pacheco roads.• Poplar Pointe LLC
Loan amount: $9.9 million construction loan
Location: 10 acres on the northwest corner of Filburn and Poplar avenues.• Eagle Meadows of Wasco 77 LLC; Eagle Meadows of Wasco 75 LLC
Loan amounts: Two loans of $2.1 million apiece
Locations: 77 acres of ag land at the southeast corner of Gromer and Magnolia avenues; 75 acres of ag land near the southwest corner of Palm and Filburn avenues.• SunCal Mission Lakes LLC
Loan amount: $74.3
Location: About 515 acres north of 7th Standard Road northwest of the intersection with the Calloway Canal.• Desert Star Communities LP and related companies
Loan amount: $11.4 million construction loan
Location: 23 acres at the northwest corner of 35th Street West and Orange Street.
13 comments:
What about the CityInTheHills fiasco? Any stress out there yet?
Yes the whole Dunmore fiasco is worth looking at. A recent article linked below discusses pending litigation against the Dunmore sons:
http://www.bizjournals.com/sacramento/stories/2007/12/24/story3.html
Old man Dunmore sold the company moments before its collapse for $500. This was allegedly done for some sort of tax reasons. See:
http://www.bizjournals.com/sacramento/stories/2007/12/03/story2.html
Rob -
The first 6 defaults listed are all located in the city in the hills developement. As you predicted long ago - this has become a mess.
Me and an associate were pitched on some of this land a year ago. We were given the hard sell "smart money is buying this", "if you want to grow your portifolio you better do it today before its too late", ... We walked out of the meeting (sales pitch) and could not quit laughing we knew these guys were F'd and needed a greater fool to take their place - sorry not here!
professor-
The $500 deal and then subsequent BK filing appears to be a total scam. Unfortunately, the trail of defaults runs from Bakersfield to Sacramento - hopefully the authorities will look into this shady deal.
BB,
It's hard for us not to gloat a little bit. The newspapers are full of "nobody expected this" and we've got blog posts from 2005 saying exactly this.
The first few cracks are leaking at Riverpark. The first of the luxury urban apartments have gone on the "pinks" looking for speculators and early interest. No need to tell you how that is working out.
And don't let anybody tell you the high end is holding up in 2006 a Callado tract house would sell before MLS for $1.1m as-is and now they sit all spiffed up at $795k. The Fairway houses are also slow, one fixer estate sale is sitting at $895k but needs $100k to bring up to neighborhood. My neighbor of a dozen years looks like he just put his up but the price is $5m so I'm thinking mistake.
There never was a luxury tract home market. it was all speculation as winners moved up and doubled down. I honestly don't know what is going to happen to CitH and RP when places like mine are less on 4x the land and half the taxes and no HOA.
Thanks adam. Soon her winnings might equal her taxes plus carrying costs assumings she eventually pays real estate commissions...sounds like she might have lost the raffle.
If I remember correctly the life on a tentative is 8 years according the the Subdivision Map Act. These repo'd projects are going to have nasty consequences for some time to come.
I think fiasco is spelled McAllister Ranch not CITH.
I know the Dunmore's. All of them. Starting from George on down. Have for almost 30 years.
They'll do whatever it takes to represent their best family interest, bar nothing.
I'm sure glad I didn't buy into the Gaskill homes project called Sienna. I drove by the other day and there were only 2 homes built (1 is a model home). There was supposed to be a park at the center of the community, but I doubt if Gaskill would build it just for one family. From what I can see in the Tuscany development by McMillin, there are already several short sales.
There have been several repos in last few months in "Tuscany".
Short sales are going to be the norm for the next few years. I heard someone mumbling about 5000+ vacant lots the other day...
Well, after I bought my annual ticket for the St. Jude raffle last year I found myself wondering if I really wanted to win a house...
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